Mexico's oil major Pemex will spend US$23 billion next year, up 14 percent on 2018, with focus on already producing fields in the shallow waters of the Gulf of Mexico as well as refining, Mexico's 2019 budget blueprint has revealed, as reported by Reuters.
Half of the total will be directed towards exploration and production, with some onshore deposits also benefitting from the investment alongside shallow-water blocks. Exploration in the deep waters of the Gulf of Mexico, however, will be put on hold.
Pemex's chief executive Octavio Romero noted at the presentation of the budget blueprint that so far, deepwater exploration has not produced particularly impressive results. "At best we'd have the first drop of oil by 2025," Romero said, after noting that the two previous governments had spent 41 percent of total Pemex investments in deepwater exploration.
Mexico's oil production is on a stable decline due to lack of new exploration, and new president Andres Manuel Lopez Obrador has vowed to reverse the decline and boost production by 50 percent. Pemex said it produced an average 1.76 million bpd of crude in October, down 7 percent from October last year. This is also one of the lowest monthly production rates since 1990 when records began.
At the same time, Obrador has plans to build the country's largest refinery with a capacity of 340,000 bpd of crude oil. The refinery would cost US$2.5 billion to build. Initial reports about the refinery mentioned a price tag of US$8 billion and a gasoline production capacity of 400,000 bpd. The aim is to reduce the country's heavy dependence on imported fuels, mostly from the United States. At the moment, Mexico imports around 1 million bpd of refined products, with most of this consisting of gasoline and diesel fuel. The imported fuels cover as much as two-thirds of local demand.
By Irina Slav for Oilprice.com
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